California's long-troubled housing market has entered a slow but steady recovery in sales and prices following its long and painful bust of the early 1990s, according to a growing consensus of real estate observers and economic reports.
The most recent sign of a statewide real estate revival came Thursday when the California Assn. of Realtors forecast a 7% increase in sales of existing single-family homes next year and a 2% rise in the median sales price, to $182,630.
Those gains will come on top of this year's expected 17.5% jump in sales to the highest level since 1989. In addition, the median price should inch up 0.5% this year to $179,050, which would be the first such increase since 1991.
"We expect the broad-based housing recovery which began this year to solidify during 1997 as both demand and home prices continue to grow throughout virtually every major region of California," said CAR President Rick Snyder during the group's annual meeting in San Diego.
However, the pace of recovery will vary from community to community. For example, some San Jose suburbs have already enjoyed dramatic appreciation thanks to the booming high-technology industry. Meanwhile, many portions of Southern California still lag behind the rest of the state as a result of foreclosure sales.
"Generally, we are looking at the firming of the market," said the Realtor group's chief economist Leslie Appleton-Young. "I don't see any particular factor that could derail the California recovery."
The CAR forecast falls in line with other recent projections and observations by real estate and economic specialists, who credit the state's rebounding economy, growing consumer confidence and improved housing affordability for igniting a turnaround.
"We believe that the worst for the housing market in terms of prices is over and home appreciation is going to come back--but don't expect a big leap," said Esmail Adibi, director of the Center for Economic Research at Chapman University. Low levels of inflation will keep a lid on home price appreciation, he said.
Premature declarations of a real estate recovery have been made for years. Many thought the worst was over in early 1994 following months of strong sales and rising prices. But a sudden boost in interest rates threw the market back into a slump, which only deepened in 1995.
